Consumer Commission Orders Central Bank to Pay Rs 2.5 Lakh for Losing Original Pattayam Deposited for Loan
The District Consumer Disputes Redressal Commission, Thrissur, has held the Central Bank of India responsible for deficiency in service after it lost an original Pattayam document deposited by a borrower as security for an agricultural loan. The Commission directed the bank to pay ₹2.5 lakh as compensation along with litigation costs.
The Commission bench consisted of President C.T. Sabu and Members Sreeja S. and Ram Mohan R.
According to the case, Sathyavalli and her son Saseendran had taken an agricultural loan of ₹3 lakh from the Central Bank of India’s Thanikkudam Branch in 2014. As security for the loan, Sathyavalli deposited the original Pattayam of her property measuring 0.8903 hectares in Madakkathara Village.
The complainants stated that when Saseendran approached the bank in 2018 for an additional loan, he was informed that the original Pattayam document could not be found. Later, in February 2023, the bank officially informed them that the document had been lost.
The complainants alleged that the loss of the original title document prevented them from dealing with their property and caused financial hardship as well as mental stress. They approached the Consumer Commission seeking compensation of ₹20 lakh.
The bank failed to submit its written reply within the prescribed time despite receiving notice. As a result, the proceedings initially continued ex parte. However, the Commission later considered the bank’s arguments and allowed it to cross-examine the second complainant.
The bank argued that Saseendran had no legal right to pursue the complaint because he was not authorised by the first complainant to act on her behalf. It also claimed that the complainants had defaulted on loan repayments and therefore were not entitled to demand the return of the original property documents.
The Commission rejected the bank’s objection. It noted that both complainants had jointly filed the case and that the bank’s own records showed both of them as borrowers under the loan account.
The Commission found that the evidence, including the bank’s own letters, clearly showed that the original Pattayam had been deposited with the bank and was later lost while in the bank’s custody. It also noted that the bank had admitted the loss and had obtained a duplicate copy of the document.
The Commission observed that banks act as custodians of valuable documents and securities entrusted by customers. Therefore, they have a legal duty to keep such documents safe and secure. The Commission held that even if the borrowers had defaulted on the loan, the bank could not escape responsibility for losing the document.
The Commission further noted that even if the entire loan was repaid, the bank would not be able to return the original Pattayam. This would place the complainants at a disadvantage because the loss of the original title deed could affect their ability to sell the property, obtain its full market value, or use it as security for future loans.
The Commission also relied on an earlier ruling of the National Consumer Disputes Redressal Commission in the case of State Bank of India vs Amitesh Mazumdar.
Holding that the bank’s negligence amounted to deficiency in service, the Commission partly allowed the complaint. While it declined to award the claimed compensation of ₹20 lakh due to lack of proof regarding the actual loss suffered, it accepted that the complainants had faced financial hardship, mental agony, and inconvenience.
Accordingly, the Commission directed the bank to jointly and severally pay ₹2.5 lakh as compensation to the first complainant and ₹10,000 towards litigation costs. Both amounts will carry interest at the rate of 9% per annum until payment is made.
The Commission also clarified that the order does not prevent the bank from taking legal steps to recover any outstanding loan dues from the borrowers.
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